Global Market Quick Take: Europe – 14 November 2024

Key points:

• Equities: U.S. equities steady; Rivian surges on VW investment news.
• Volatility: Volatility eases with lower expected index moves; markets await Fed Chair Powell’s speech.
• Currencies: USD strength continues across the board.
• Commodities: Gold slide towards next key area of support; Crude on hold with focus on IEA
• Fixed Income: U.S. Treasury curve steepens sharply on fed rate cut hopes and Trump trade bets.
• Macro events: US Oct. PPI, US Weekly Jobless Claims, US Fed Chair Powell speaks

The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.

Macro data and headlines:

• Australia Oct. Employment Change out at +15.9k vs. +25k expected, with the unemployment rate steady at 4.1% as expected
• US Oct. CPI was exactly in line with expectations, posting a rise of 0.2% MoM and +2.6% YoY for the headline and core Ex Food and Energy at 0.3%/3.3%
• UK Oct. RICS House Price Balance, a measure of UK house prices, rose to highest level since 2022 at +16% versus +11% expected and +11% in Sep.
• The US Federal Government Budget Balance slipped to USD -257.5B vs. -232.5B expected

Macro events (times in GMT) IEA’s Monthly Oil Market report (1000), ECB Meeting Minutes (1230),  US Oct. PPI (1330), US Weekly Initial Jobless Claims (1330), EIA’s natural gas storage change (1530), EIA’s weekly crude and fuel stock report (1600), Mexico’s Central Bank Rate Announcement (1900), US Fed Chair Powell to speak (2000), UK Bank of England’s Bailey to speak (2100)

Earnings events:

• Today: Siemens, Deutsche Telekom, Disney, Applied Materials,
• Friday: Alibaba

For all macro, earnings, and dividend events check Saxo’s calendar.

Equities:

• US: The S&P 500 closed flat after the latest CPI report met expectations, maintaining optimism but signaling a pause in the post-election rally. Rivian’s shares surged 13.6% as Volkswagen increased its planned investment to $5.8 billion. SMCI declined another 6.4% following its delayed earnings report, extending its downtrend since a critical report from Hindenburg Research.
• Asia: Most Asian stocks traded lower on Thursday as markets showed caution following the U.S. inflation report and awaited further clarity on stimulus from China. Chinese equities showed minimal movement, with the CSI 300 and Shanghai Composite each down 0.2%. Hong Kong’s Hang Seng Index dropped 0.8%, pressured by concerns over a potential tough U.S. trade stance under the Trump administration. Tencent rose 1.2% following strong Q3 earnings, but overall sentiment remained subdued.
• Europe: European stocks saw modest declines with the STOXX 50 and STOXX 600 both down about 0.1%, marking three-month lows as traders assessed the latest political and economic factors, including Trump’s potential China-critical appointees and ongoing challenges in Germany’s political scene. In corporate news, RWE surged 6.1% after announcing a share buyback, and Siemens Energy gained 18.9% following an upbeat mid-term outlook.

Volatility: Volatility remains subdued as markets digest recent CPI data, which came in line with expectations, reducing immediate inflation concerns. Options activity remains robust in high-profile names like Tesla, Nvidia, and Amazon, but implied volatility for these stocks is stabilizing. Lower expected moves across major indices further reflect a cautious yet steady outlook. Markets are now watching for insights from Fed Chair Powell’s speech later today, which could influence sentiment and volatility depending on any hints toward future rate policy.

Fixed Income: The U.S. Treasury yield curve steepened significantly on Wednesday as October CPI data strengthened expectations for a December Fed rate cut. Front-end yields dropped, while long-term yields rose, pushing the 5s30s spread to its largest one-day increase this year. Although Treasuries initially rallied on the CPI data, gains faded as stocks recovered. By the end of the day, markets were pricing in around 20 basis points of rate cuts for December. European sovereign bonds fell, led by Bunds as real yields rose on renewed Trump trade bets while ECB rate-cut expectations remained steady.

Commodities: Gold slipped again as a continued rise in US yields and a stronger US dollar saps interest while forcing long-liquidation. The next levels lower are USD 2,500 and 2475-2485, which was a major zone of price resistance on the way up. Silver, meanwhile, has slipped below the psychologically significant USD 30 per ounce level, weighed doubly by slipping copper prices. The next level of note there is perhaps the 200-day moving average at 28.67. Crude oil remains in a holding pattern with focus on IEA’s monthly forecast for global demand.

Currencies: The US dollar powered stronger after an indifferent US October CPI release yesterday that offered no fresh surprises. The move was accompanied by long US treasury yields rising back toward the recent highs. USDJPY notched fresh local highs over 156.00 and EURUSD dropped below 1.0550, posting new lows for 2024. The range low since late 2022 was the 2023 low of 1.0448. US Fed Chair Powell will speak late today.

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